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InfraStrata takes aim at FSRU project in UK

London-listed player signed agreement with Meridian Holdings over long-proposed import terminal

UK player InfraStrata is set to cast the net for investment after striking a deal related to the planned development of a floating storage, regasification unit profit in northern England.

The London-listed company has entered into an exclusivity agreement with Meridian Holdings in relation to the long-planned project at Morecambe Bay, Cumbria.

The project involves the development of a floating liquefied natural gas port at Barrow-in-Furness with projected capacity of 5 million tonnes per annum of LNG.

Gas will be used for the domestic market, with InfraStrata indicating it envisages the unit having reloading capability.

The project has long ago already overcome hurdles after receiving planning permission and consenting from local authorities for the offshore segment. InfraStrata is currently undertaking a detailed review of this segment.

Land parcels and easements required for the onshore segment – installations and pipelines – have also been acquired.

InfraStrata said a typical FSRU project of this scale would entail capital expenditure of between £250 million to £400 million ($311.63 million to $498.6 million) and involve a construction period of between three and four years.

The company intends to see investors to help finance the project, but envisages retaining a minority stake.

If following due diligence the partners move forward with the project, Meridian will receive shares in InfraStrata, with a cash consideration payable upon completion of acquisition of the project.

InfraStrata chief executive John Wood said: “The UK gas market is witnessing a significant shift in its supply stack and LNG is set to form an important part. As an energy infrastructure company, we are looking at not only building a diverse portfolio of assets but also creating the ability for each asset to complement the others.”

The FSRU project has been long in the running. In mid-2009, then project operator Hoegh LNG said it would take a final investment decision on the proposed import terminal project the following year. It envisaged a 1.2 billion cubic feet per day project.

However, in late 2012 the Norwegian company agreed to sell Port Meridian Energy to Meridian Holdings, owned by Toronto-based investment manager West Face, for $20 million.

Under a joint development agreement with West Face at that time, Hoegh was to remain as the supplier and operator of the FSRU for the terminal.

Meridian was to develop the commercial agreement for LNG imports and the pipeline connecting the FSRU to the gas distribution grid.

Hoegh said at that time it anticipated the project would start operating from 2016.

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